The Guyanese authorities have just cancelled a five-year water management contract with Severn Trent Water International (STWI) citing the company's failure to meet five out of the seven objectives in the contract.

The Birmingham-based company was being paid its fees for this contract by UK tax-payers out of the UK aid budget, while the privatisation plan was developed by consultants, also paid for by UK aid money.

"Our aid budget has been used to pay the fees of a British private water company operating in a developing country," said WDM water campaigner Vicky Cann.

"Many people will be shocked to learn that millions of pounds of UK aid has propped up the water privatisation in Guyana - money that has now been washed down the drain. The people in Guyana have not received the services they were promised and the authorities seem to have concluded that Severn Trent Water International was not up to the job," she said.

According to press reports, Guyanese minister Harry Narine Nawbatt has said that the decision to terminate the contract was influenced by the results of an audit into STWI's performance. The audit showed that while 80 per cent of the Amerindian settlements should receive potable water by 2005, only 4.3 per cent of those settlements received water in 2006, according to media coverage.

"When will the donor community recognise that water privatisation is no solution to tackling the global water crisis? Severn Trent Water International has recently been awarded a similar contract to manage water services in Nepal, despite strong civil society opposition. Surely events in Guyana should lead Severn Trent Water International to pull out of this venture."

1. Severn Trent Water International (STWI) signed the private management contract for Guyana Water Incorporated in November 2002 . The contract was ended on 15 February 2007, but was due to run for another 10 months .
2. This contract was cancelled following an audit (conducted by Halcrow Group Ltd and funded by DFID) of STWI´s performance . According to media reports, STWI met only two of the seven targets in the contract. Targets included: provision of water to the Amerindian community; revenue collection; and leakage reduction . ( http://www.stabroeknews.com/index.pl/article_general_news?id=56514219 )
3. DFID´s support for this privatisation project comprises expenditure of £1,857,662 on the management contract itself up to February 2006, with provision for a further £1 million after this date. (Information provided by DFID to WDM under the Freedom of Information Act. 30/03/06.)
4. A further £879,068 was spent on consultancy work by KPMG in 1999 which recommended restructuring the water sector and placing it under private management .
5. Overall DFIDs support to Guyanas water sector in 2002-2008 will total £13 million . (Information provided by DFID to WDM under the Freedom of Information Act . 30/03/06 . )
6. The introduction of private sector management for the water sector was set as a condition of funding to the country in the World Bank 2002 County Assistance Strategy for Guyana .
7. In January 2007, DFID awarded £80,000 to private sector consultants Castalia to look at restructuring options for Guyana Water Inc . According to media reports, these options will include a 'turnaround' plan, although no details have been made public . ( http://www.guyanachronicle.com/ARCHIVES/archive%2017-02-07.html#Anchor-------------24259 )
8. In 1996, STWI were awarded a contract to run the water supply system in Trinidad and Tobago . The contract was terminated in 1999 following poor performance by the privatised utility .
9. STWI was recently awarded a further contract to manage water supplies in Nepal , despite local political instability, civil society opposition and the imposition of water privatisation conditions by the Asian Development Bank . In December 2006, WDM wrote to STWI to express deep concerns about this contract .